Looking Beyond M&A

Everyone in the investment banking and corporate development fields has heard of Virtual Data Rooms or VDRs—and many of those people rely on them daily.

But the full potential of VDRs to streamline a variety of company tasks is only now being realized.

This post is the first in a series exploring the many uses of VDR technology outside of its usual role in conducting M&A due diligence.

When it comes to understanding the untapped potential of VDRs, it helps to know a little history regarding their development. VDRs were initially created to address a very specific business legal need: due diligence.

Before the internet age, when a company was sold, potential buyers would be brought from around the world to a secure physical room—the data room—to be shown confidential financial information.

This was a hugely costly and time consuming procedure, often costing millions of dollars and lasting for months.

With the increasing power and complexity of the internet in the early 2000s, fin-tech companies began to appear offering an online, cloud-based alternative that revolutionized the M&A process.

Now, instead of physically flying buyers to a data room and hosting them throughout the due diligence process, companies could upload the relevant documents to a securely encrypted server, where they could be accessed by potential buyers and corp dev teams from the comfort of their own offices.

At its most basic level a VDR is simply a specially encrypted cloud-based data hosting service—a secure version of dropbox.

While the technology was initially developed to address a very specific functional need, the utility and flexibility of the VDR has encouraged a variety of other industries to implement it into their workflow.

In the world of finance, VDRs have been used to process documents and data pertaining to a wide variety of corporate tasks, ranging from fundraising efforts, IPOs, tender offers, bankruptcy filings, and privatizations, to name just a few.

The agility of the VDR platform has driven its adoption in fields outside of finance as well.

VDRs are used today in the legal industry, the pharmaceutical and healthcare industries, the mining and energy production industries, the real estate industry, and others.

Given its extremely broad applicability, VDR technology has emerged as one of the most powerful SaaS services in the entire field of fin-tech.

The importance of the tool is reflected in the number of companies offering a VDR service, ranging from well-known industry leaders like MerrillCorp, Intralinks, and Donnelly Financial Services to smaller firms such as Firmex, iDeals, Ansarada, Brainloop, Box, Watchdox, Sharefile, and others.

All these providers offer different features and a different user experience, but deep down they all share the same purpose: to provide a secure centralized space for companies to store, access, and collaborate on confidential documents.

FirmRoom and its parent software DealRoom have taken VDR tech a step further by integrating a project management tool directly into the data room platform.

This PM tool includes a versatile ticket workflow system which allows users to track the progress of different tasks and share that data across functions.

The flexibility of this ticketing system means that it can be tailored to meet the specific project management needs of any industry.

Innovations like this are just one way that VDRs are constantly evolving to creatively meet emerging needs and optimize workflow in a broad range of industries.

Kison

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We are pleased to announce that FirmRoom has been given two awards by FinancesOnline: the Great User Experience 2018 award and the Rising Star 2018 award. FirmRoom also ranked in their top 50 “File Sharing & Document Management Software.”

The use of VDRs like FirmRoom was and continues to be one of the most long-standing trends in M&A over the past few decades. VDRs are designed specifically to promote security, efficiency and accountability during the due diligence stage so that M&A leaders can focus on what really matters: Closing the deal.